Mercantile Mutual Custodians P/L v Village Nine Network

IN THE SUPREME COURT
OF QUEENSLAND
No. 1823 of 1996
Brisbane
[Mercantile Mutual Custodians P/L v Village Nine Network & Ors]
BETWEEN:

MERCANTILE MUTUAL CUSTODIANS PTY. LTD.
(ACN 008508496) Plaintiff

AND:

VILLAGE/NINE NETWORK RESTAURANTS & BARS PTY. LTD,
(ACN 061400799) First Defendant

AND:
VILLAGE ROADSHOW LIMITED
(ACN 010672054) Second Defendant

AND:
  PUBLISHING AND BROADCASTING LIMITED
  (FORMERLY NINE NETWORK AUSTRALIA LIMITED)
(ACN 0090711617)  Third Defendant

CATHCWORDS: CIVIL LAW - Application for leave to deliver a further amended defence - General Steel Inc. v. Commissioner of Railways (NSW) 112 C.L.R. 125 applied - conditions as to particularity of amended defence imposed

Counsel: Mr D. Jackson Q.C. with him Ms J. Dalton for the respondent/plaintiff
Mr D. Andrews for the applicant/defendants

Solicitors: T. Mann & Partners for the respondent/plaintiff
Herbert Geer & Rundle for the applicant/defendants

Hearing Date: 30 September 1998
REASONS FOR JUDGMENT - B.W. AMBROSE J.

Delivered the 7th day of December 1998

This is an application by all three defendants for leave to deliver a further amended defence to the plaintiff’s Statement of Claim.
The dispute giving rise to the action arises from a Deed of Agreement for Lease dated 19 September 1994 whereunder the plaintiff as lessor of part of an inner city redevelopment in Brisbane agreed to lease to the first defendant part of the redeveloped building. The second and third defendants guaranteed to the plaintiff performance of the first defendant’s contractual obligations.
The Agreement for Lease was conditional upon the plaintiff obtaining various building approvals and development approvals to permit the premises the subject of the Agreement for Lease to be used by the first defendant for the purposes contemplated by the parties.
The obligation was on the first defendant to apply for approvals, various liquor licences and operational permits etcetera to permit it lawfully to use the premises the subject of the agreement of the lease for the purposes contemplated by the parties.
Under the Deed of Agreement for the lease it was the plaintiff’s obligation to cause the development works to be carried out in a proper and workmanlike manner and in accordance with specified approvals and requirements.
There was also an obligation on the plaintiff to substantially complete all works upon the redevelopment of the building by a specified completion date and to produce certificates etcetera to this effect.
Without embarking upon a detailed analysis of the facts giving rise to the dispute between the parties to this action insofar as they may be gleaned from the enormous amount of detailed and argumentative material referred to upon the application, it will suffice to say that in February 1996 the first defendant asserted that by reason of the plaintiff’s non-compliance with various of its obligations, the Deed of Agreement for Lease had been terminated. The plaintiff asserts that the first defendants stand amounted to an unlawful repudiation of its obligations under the deed and constituted an anticipatory breach of its contractual obligations. Shortly afterwards the plaintiff purported to elect to accept the first defendant’s wrongful repudiation of the deed and to itself lawfully repudiate the Deed of Agreement for Lease upon that ground.
Both parties treated the agreement as terminated and/or rescinded by March 1996 when this action was commenced - completion of building work did not occur until the end of 1996.
The writ in this action issued on 1 March 1996. The first Statement of Claim was delivered on 19 April 1996.
The first defence was delivered on 23 May 1996.
The first reply was delivered on 2 July 1996. An amended reply was delivered 10 July 1996.
Subsequently an amended Statement of Claim was delivered on 4 October 1996 and an amended defence was delivered on 18 October 1996.
Interlocutory applications have been brought by the first defendant in August 1996, October 1996 and April 1997.
The plaintiff has also brought interlocutory applications.
There have been replies and amended replies and rejoinders and amended rejoinders delivered during 1996 and 1997.
On 11 September 1998, Moynihan J. made an order relating to disclosure of documents. The reasons for that judgment were placed before me upon this application.
It emerges that on the day the order was made and reasons for it delivered, the defendants served the plaintiff with this latest “amended defence” raising yet further factual issues.
On 18 September application was made for leave to deliver this further amended defence. The application was heard on 30 September 1998.
Stated shortly, two and a half years after the action was commenced, during which time numerous interlocutory applications have been brought and numerous amendments to pleadings have been made and upon the evidence after the plaintiff has expended the best part of $100,000 in disclosing documents relevant to the issues on the pleadings as they formerly stood, the defendants now seek to deliver a yet further defence raising new issues - some of which have not been defined with any particularity.
The plaintiff contends that it is anxious to get the matter on for trial because the determinative issues really are within a short compass. It contends that the latest (and third) edition of defence pleads matters which are quite unlikely to be determinative of the crucial issues between the parties - which are those between the plaintiff and the first defendant. It is contended that the only result of raising such matters at this late stage will be to further delay the trial of the action by raising issues which on their face seem to be hardly if at all relevant to the real issues to be determined for the purpose only of having the plaintiff embark once again upon a time consuming and very expensive disclosure of documents exercise which will inevitably further delay determination of the real issues between the parties. The plaintiff complains that had these issues been raised in one of the first two defences delivered by the defendants - albeit in its contention that they are irrelevant - prior to the extensive and expensive disclosure exercise already undertaken by the plaintiff, even accepting the relevance of the latest issues raised for the purpose of disclosure, full disclosure could have been made at the same time as disclosure made on the earlier issues raised upon the current pleadings at a cost significantly less than the likely cost of two separate disclosure exercises.
While I have sympathy for the plaintiff’s complaints, in my view it is undesirable upon an application of this kind to embark upon a detailed consideration as to whether the matters raised in the latest amended defence provide the defendant an arguable basis upon which to defend the plaintiff’s claim. As I understand their contention, had they known of the various deficiencies in design and construction which they now seek to raise they would have been entitled to rescind the agreement when they purported to treat it as “terminated” in February 1996.
At this stage of the action when it has not even been set down for trial, in my view it would be undesirable to approach the application for leave to amend the defence as one might approach an application to strike out the proposed amendments on the ground that they disclose no defence or to approach the plaintiff’s opposition to it as in the nature of a demurrer.
In my view, giving all weight to the detailed and in many respects, persuasive arguments advanced on behalf of the plaintiff as to the likely success of the matters raised in the latest amendment to the defence, I take the view that having regard to what was said in General Steel Industries Inc. v. Commissioner for Railways (NSW) (1964) 112 C.L.R. 125 at 130 the defendants should at this stage be given leave to amend their defence on conditions and provided appropriate orders for costs are made.
I will give such leave however only on condition that particulars of new facts pleaded be incorporated in the proposed amended defence.
With reference to paragraph 8B of the proposed amended defence in my view the lack of particularity in this paragraph is such as to further delay the prompt determination of the issues between the parties. If the defence is amended only in the terms sought there will certainly be applications for further particulars. I rather suspect that it will then be demanded that further disclosure be made before those particulars can be specified. It would be inappropriate at this stage of the proceedings to make an order which would require disclosure of documents without any particularity of the facts to be proved under paragraph 8B being given so that a fishing expedition might be conducted during which an enormous number of documents can be trawled over in the hope that they may produce evidence of some “particular” that might support the general allegations made in paragraph 8B as proposed. Counsel for the defendants freely conceded that they would rely upon any other matter they might “find between now and the trial date” to support their contention that they would in fact have been entitled to rescind the agreement on a ground then unknown to them albeit that they did not in fact purport to rescind it until 20 September 1996 - more than six months after the institution of the action and after close of the first set of pleadings.
I therefore propose to give the defendants liberty to deliver their proposed third amended defence containing paragraph 8B(a)(b)(c)(d) in its present form on condition that all particulars of fact or facts relied on to support those breaches of duty are provided in that defence. If the only facts relied upon to support the breaches of duty pleaded in paragraph 8B are those relating to breaches pleaded in (b), (c) and (d) then the breach pleaded in (a) “failed to construct the lessor works in accordance with Schedule 2 of the deed” must be deleted from the proposed amended defence. If however any facts other than those relied upon to support (b), (c) and (d) are relied upon to support (a) particulars of:
(i)The precise part or parts of Schedule 2 of the deed and;
(ii)The precise respect in which the constructed works did not accord with such part or parts
so relied upon must be provided in the amended defence.
One object of imposing this condition is to limit the extent and expense of disclosure. Another of course is to inform the plaintiff what factual case it must prepare to meet.
With reference to paragraph 13A of the proposed amended defence, I allow that amendment subject to the following conditions -
With respect to (a)
·Full particulars of the facts “evidencing an intention” pleaded in (a);
·Full particulars of the facts alleged to constitute the plaintiff’s failure to construct lessor works specifying each failure and specifying the part or parts of Schedule 2 to the Deed relied upon;
With respect to (c) -
·Full particulars of all facts whereby it is alleged that the plaintiff had become wholly and finally disabled from performing its obligations under the Deed;
With respect to paragraph 30 of the proposed amended defence -
·Full particulars must be included in the defence as to acts of the plaintiff alleged to have induced the belief and expectation in the first defendant pleaded.
With reference to paragraph 31 of the proposed amended defence -
With respect to (a) -
·Full particulars of all the steps referred to in (a) together with full particulars of all plans and specifications for all applications and full particulars of all relevant authorities referred to therein.
With respect to (b) -
·Full particulars of all applications made, specifying each relevant authority to which each application was made.
With reference to (c) -
·Full particulars of all expenditure incurred in retaining consultants;
·Full particulars of all consultants so retained to prepare plans and specifications necessary to apply for lessee approval;
·Full particulars of all plans and specifications so prepared;
·Full particulars of all lessee approvals to which reference is made.
With reference to paragraph 34(b) of the proposed amended defence -
·Full particulars of all facts relied upon by reason of which it is contended that the plaintiff ought be estopped.
With reference to paragraph 35(a) of the proposed amended defence -
·Full particulars of each fact alleged to constitute in whole or part the plaintiff’s failure to construct the first and second floors of the premises in accordance with the requirements of Schedule 2 of the Deed specifying each of those requirements and the respect in which any item or items of construction failed to comply with such requirements.
I grant the leave to amend sought on the further condition that the defendants pay to the plaintiff on a solicitor and client basis, in any event, its costs incurred in making yet further disclosure of documents by reason of the amendments to the defences for which leave is given..
When the further amended defence properly particularised is delivered the plaintiff may then consider whether to make an application to strike out those parts it contends raise no defence to the plaintiff’s claim having regard to the test in General Steel (supra).
I give the plaintiff liberty to deliver further pleadings if necessary to meet the latest amendment to the defendants’ defence.
In my view this is a matter which when this set of pleadings has been completed should forthwith go to mediation and/or case appraisal.
Before that step can be taken of course, pleadings must be completed between the parties which hopefully will define the real factual issues in dispute and the legal dispute as to the consequences which flow from the determination of those issues. Upon disclosure of all documents relevant to those issues, the matter should go to mediation and/or case appraisal when directions may be given to facilitate that resolution process.
COSTS
I order that the plaintiff’s costs of opposing the defendant’s application for leave to amend yet again the defence be the plaintiff’s costs in the cause. In making this order I have regard to the stage that the prosecution of the action has reached and that there has apparently already been an application to have the matters currently in issue between the parties mediated.

[1998] QSC 276

7 December 1998